Dental Charges vs Billed Amount: Understanding the Difference

Dental billing can be confusing for both patients and dental office teams, especially when the amount charged by the dentist is higher than what appears on the insurance Explanation of Benefits (EOB). Understanding the difference between the charge amount and the billed amount—and how insurance companies determine what they will pay—is essential for accurate billing, effective communication, and a positive patient experience.

Charge Amount vs Allowed Amount: What's the Difference?

Every dental procedure is assigned a specific fee by the dental office, known as the charge amount. This is often based on the office’s fee schedule, which reflects the cost of providing care, overhead, and expertise. However, when a dental claim is submitted to insurance, the insurer reviews the procedure and applies their own allowed amount—the maximum they will pay for a specific CDT code under the patient’s plan.

The allowed amount is determined by the insurance company’s contract with the dental office (if in-network) or by their usual and customary rates (if out-of-network). The difference between the charge amount and the allowed amount is where billing adjustments and write-offs come into play.

Why a Dentist's Charge Might Exceed the Insurance Allowance

It’s common for dental offices to set their fees higher than the insurance company’s allowed amount. Reasons include:

• Reflecting true costs: The office’s fees are designed to cover the actual cost of care, which may be higher than what insurance considers “usual and customary.”
• Out-of-network status: If the dentist is not contracted with the patient’s insurance, the insurer may allow less than the office’s standard fee.
• Plan limitations: Some plans have lower maximums for certain procedures, regardless of the dentist’s fee schedule.

It’s important for dental teams to verify insurance benefits before treatment and to communicate any potential discrepancies to patients upfront.

Balance Billing: Can Patients Be Billed the Difference?

Whether a patient can be billed for the difference between the charge amount and the allowed amount—known as balance billing—depends on the dentist’s network status:

• In-network providers: Contracted dentists agree to accept the insurance allowed amount as full payment (except for deductibles, co-pays, or co-insurance). They must write off the difference and cannot bill the patient for it.
• Out-of-network providers: Non-contracted dentists are not bound by the insurance company’s fee schedule. They can bill the patient for the difference between their charge and what the insurance pays, unless prohibited by state law or specific plan language.

Dental offices should always check the patient’s plan details and explain any potential balance billing before treatment begins.

How Write-offs and Adjustments Work

When the insurance allowed amount is less than the dentist’s charge, the difference must be adjusted off the patient’s account if the provider is in-network. This is called a contractual write-off. Here’s how the process works:

1. Submit the claim: The office submits a claim with the full charge amount and appropriate CDT codes.
2. Receive the EOB: The insurance company sends an EOB showing the allowed amount, patient responsibility, and any write-off required.
3. Post adjustments: The dental office posts the insurance payment and writes off the contractual adjustment in their accounts receivable (AR) system.
4. Bill the patient: The patient is billed only for their deductible, co-pay, or co-insurance—not the write-off amount.

If there are discrepancies or denials, the office may need to file a claim appeal, providing additional documentation to support the billed amount.

Communicating Costs Clearly to Patients

Clear communication is key to avoiding confusion and building trust. Best practices include:

• Insurance verification: Always verify benefits and eligibility before treatment. Confirm coverage, allowed amounts, and patient out-of-pocket costs.
• Pre-treatment estimates: Provide written estimates based on insurance verification and explain possible scenarios if the insurance pays less than expected.
• Transparent billing: Review the EOB with the patient, showing the charge amount, allowed amount, insurance payment, write-off, and their responsibility.
• Proactive follow-up: If there are claim denials or unexpected balances, contact the patient promptly and explain their options, including appeals or payment plans.

By following these steps, dental offices can minimize billing surprises, reduce accounts receivable issues, and ensure patients feel informed and respected throughout the billing process.